Draghi hopeful of banking union progress

GMT
00:19 2012
Friday ,14
December

London - AFP

European Central Bank (ECB) chief Mario Draghi is confident that a central authority with the power to wind down failing eurozone banks will soon be in place, according to an interview in Friday\'s FT.
Eurozone finance ministers on Thursday appointed the ECB as the Single Supervisory Mechanism (SSM), meaning it will monitor banks with assets of more than 30 billion euros, or equal to 20 percent of a state\'s economic output from March 2014.
Draghi told the Financial Times that the controversial next step towards a banking union -- the creation of a central resolution body to supervise the orderly winding down of insolvent lenders -- would be taken imminently.
\"A European resolution authority is an important complement to the SSM and it will probably be in place by the time the SSM takes up its responsibilities,\" he said in an interview published on the business publication\'s website.
The banker\'s comments were made shortly after the paper named him as the \"FT Person of the Year\".
German Chancellor Angela Merkel stressed that Thursday\'s deal \"cannot be valued highly enough\" and called it a \"big step towards more reliability and trust in the eurozone.\"
Agreement on a central resolution authority is likely to be hard won as its creation could result in taxpayers being put on the hook for losses incurred by foreign banks.
The SSM for the eurozone -- which Britain and Sweden will not take part in -- will mean the ECB directly supervising some 200 of the biggest banks out of the estimated 6,000 eurozone lenders.
Draghi hailed the accord as \"an important step towards a stable economic and monetary union, and towards further European integration\".
During his interview with the FT, the ECB boss also urged troubled eurozone governments to continue with their austerity programmes as they attempt to rein in crippling deficits.
Draghi admitted that public-spending cuts had been \"painful\" but warned that changing track now would be \"tantamount to giving up all the sacrifices that millions of people have made so far.\"